tv On the Move Bloomberg July 1, 2014 3:00am-4:01am EDT
between israel and palestine after the bodies of three missing teenagers oh who were a dubbed it and murder while -- who were abducted and murdered while hitchhiking. the eyes on gaza. details of all the the growing tensions in half an hours time. >> thank you very much for that. despite a focus on the banking sector and big finds and the geopolitical that drop, what we see from the equity markets that are just opening up? let's get a detailed look with a manus cranny. on the equities, they should turn from reddit yesterday, a little bit of a green up 1%. europe is trading at the highest since 2000 and nine. on an earnings basis, 15 times. -- since 2000 and nine. andtop 10 survey came in
capital expenditure is rising and you saw the nikkei close a reasonably high. china, the presaging -- the purchasing managers coming in. wet is carrying through and are waiting for the german jobless numbers two, through. the first drop in the 10 months is expected. first german jobless numbers to come through. and the united states' performance. 1s. equities indicated up, 955. today, the chicago purchasing manager so you will get a little bit more pmi. purchasing managers in the united states. above estimates. we are waiting for u.s. manufacturing and europe manufacturing. german and also manufacturing data here in europe.
the final renewal come through. those are the dominant macro things and companies in focus. you have the services for variety of businesses. i saw the stock fall by 18% and it closed out. more or less, they will lower the guidance for 2014. they are going to make cost cuts. a lot to do with the german energy business which is an transformation. that is the analogy. how did we get to $9 billion. i will tell you. the u.s. authorities refuted at how much it they made i reaching sanctions as a upgrade in the process in doing so. stock wise, after all the discussions, the key issue is capital and i will tell you why you will have tier 1. intercontinental, why is it down
6.9%. it has been paid and also consolidation on the stop. >> thank you very much. the start of european trading for this tuesday morning. let's talk travel. earlier this morning, online retailer will invest in air asia in japan. teaming gobbled with the producer and forcing -- teaming up with the producer and rakuten. joining us from tokyo. thank you for joining us on the move this morning and congratulations on your announcement. how are you going to a sure the joint venture in japan is a little longer -- in short the joint -- ensure the joint venture and japan is a little longer? >> i hope we do not go 1, 2, 3, 4, 5. in life. no guarantees
we have some partners that have view so we feel confident we will be able to extract tremendous value. >> it is interesting, isn't it, tony? policies. an online retailer in japan and all kinds of businesses. you have a lot of experience doing it with other airlines and i do not work out in japan. you are going to another route. witho you think of being an on-time retailer will be a more successful formula? aa was ourtually, first airline with a joint venture and we partner with like-minded entrepreneurs. air asia is an internet company. people to tell so many that 80% of our business is online and the potential of doing high ups to do stuff with
--ir online shop and with ci is vicki, there are entertainment platform. what we can do on top of the fact they have a huge client database and the travel market. the main reason for this is really like-minded people who want to do something and change the way the japanese aviation is. and very influential and will help us and developing the law calls industry and deregulation. -- low-cost industry and deregulation. in for.n interest how much time you spent talking about aviation and about cpr? we will not talk about that. tell me about the ownership rules. which dr. dubious partnership deals because you cannot take -- which you have to do with these partnership deals because you
cannot take a majority stake. it has to be much easier if you do not have this type of legislation. >> without a doubt. it is one of those whippings that happens that airlines are so nationalistic that you cannot own more than 50%. these things are growing -- are changing and you have seen in europe with ryan air. we will be able to earn more than 50% and working hard on that. without economic integration, we help airlines will be, the first industry where we can own a 100% so it takes time. when i came in 12 years ago, it changed a lot. i am very excited about the integration. we can persuade the japanese and indian that we got on more than one and maybe a group company.
these things take time. -- we can own more than one and maybe a group company. >> what will be the secret for locals in japan? some are pointed out despite low heldcompetition, aa has onto a lot of power. low-costis no true airline. the ones i have have shareholders that are premium airlines. they are majorly conflicted because of a on a premium arline -- because they own premium airline. low-cost airports and deregulating the market in japan is a fantastic market. and zip government is drive -- government is
driving it hard. they sit on the boards of wonderful carriers in taiwan and southwest you jump. every agent wants to come to japan. -- and southwest asia. it is too expensive to travel right now. i am optimistic. i am optimistic we invented the price down. airports are usually high cost. >> tell me about your thinking on aircraft. we are looking forward. changes around that particular aircraft. is that something you are interested in? trillionillion, percent. i have driven rolls-royce crazy.
themully, i have persuaded and we will have to wait and see and they believe this the right aircraft but i think if they come out, it would be a killer aircraft. >> a you think they might come -- are we that close to an announcement? [laughter] for me to say. that's for the airbus people. all i can say is they are the and they- wise men would know better. i look at it from a one-dimensional aspect. >> a final thought. the supportsome of and interest. you have had this long-standing relation with formula one. db you want to get out the formula one anytime -- it do you think you want to get out of formula one anytime?
needs ank formula one loss of focus. what i do love is the car business. dachshund needs a lot of focus. formula one will let people know. we'll watch in the space but we love what we do. >> tony, thank you very much. good look for your venture. tony fernandes. >> cheers. >> let's have a look at the bill finger. there it is.- no, i am looking at the wrong charge. they are down 15 points. they have lowered their outlook. the company is going to and the further short term in cost reduction without delay according to that business this morning. bnp has agreed to plead guilty
to u.s. sanctions of violations and pay nearly $5 billion. the senior adviser to discuss the banking sector and how we should view the banking sector and any areas. bob, thank you for coming in. this a sizable fine bigger than the past. is it a new era in banking? ask them for five years ago, it would've been yes. what we have seen has been a trend increase. a trend increase in fines. if we look at fines levied by the u.s. regulators since 2009, we are up to about $105 billion in u.s.. all of that non-us banks in the region of $35 billion u.s. is the globale reach of the u.s. regulators.
and to be fine applied to the sanctions and doing business in countries like sudan and iran. >> is a going to herald a new era of european banks or other businesses globally looking for alternatives to the u.s. dollar or is it wishful thinking of european leaders? >> a number of trends will be accelerated. the first is the deleveraging of .hink -- a banks' sheets to the nonbanking sector whether it be asset managers or shadow banks. wasctor there were regulators at the moment is who is regulating shadow banking -- and that worries regulators at the moment is who is regulating shadow banking? i think another trend is a reduction in risk assets on the
balance sheets. one thing that concerns is with reduction by the investment banks, that can lead and i will argue to reduction in liquidity is alobal capital and that point of concern and certain markets like a corporate bonds. >> let's talk about corporate want markets and where you may see a lack of volatility and store go for the future. are you worried about the environment? >> as an asset manager, we are in a difficult situation and the reason why i say that is we have had a number of very strong trends such as the rally in corporate bonds and compression of the eurozone such as the very strong global equity market for five underad quarter years. the loss of those strong trends which asset management has done very well are now looking rather
exhausted. we logical conclusion is will see a reversal and the trends and i suspected that has not been the case. i suspect we will go through a fromd of was we saw 2003-two thousand seven. in corporate bond markets, what we have and no one looks at investment grade and we are down to less than 70 basis points, we can trade sideways from here. volatility is a course for concern in both the bond and equity markets. many investors will say that obviously we have to do the reverse. market andbear developed. that is the case. within get through a time of sideways -- we can get it through a period of sideways. >> what makes you confident that we do not see a correction and the second half? >> it could be very minor.
>> what gives you the confidence? >> three factors. continuesis the ecb to follow a very easy monetary policy. same for the bank of japan. the fed will and tapering in october and i stick to my view of the first arise will be next march or april. monetary policy in the u.s. is moving super easy to easy and it would not be described as the end of next year close to 1% with a nominal gdp is growing by 5%. that is a very easy monetary policy. the numbers offer a disappointing first quarter the states and weaker dater in and may. april the numbers will pick up and we will see a robust of growth in the developed world in the second half of this year. >> evil will start to adage, -- even we start to hedge, want to go up at some point a user not
see that the end of the stop rally? underestimating what the central bank is saying. they have a very clear message. gettingnot seem to be across a very well. the interest rates are going to go up but the pace of increase will be very slow and the increase will be very minor. a raise of 1% by the end of 2015 compared to gdp growth of 3% and installation of 2%. chrissy you mentioned the fed and bank of england. stay with us. marco carney, one year since he took charge as a bank of england. carney, one year since he took charge at the bank of england. tom gibson takes a look. were football teams,
mark carney would be just star striker. when he stepped in, he faced a tough task. his fans were cheering him on. almost right away, he launched his first attack to stop the introduction of first guidance. not all of his teammates approved. fasteryment went down than a desperate player in the box. just six months after announcing his guidance, garney -- mark carney loosed the goalposts. and the u.k.today is at the top of the league. with economy, he may need to go on a counterattack once again. central banking, it is a funny old game. >> it is a funny, old again. to governor carty. -- it is a funny, old game. -- to governor carney.
not a great record. first are comparing a central bank governor who had a superb track record at the bank withnada and i can go on the criticism at the moment of mark carney is not justify a you are comparing a mark carney with face, and english football team where the results were not spectacular. >> we talked to danny who used to be as the bank and he was prettythat he was critical of forward guidance and does not credit it to the u.k. recovery. he said the bank of england played its part and help to buy and if late it home prices. it inflated home prices. would you give carney credit? >> yes, i would. everybody underestimates the pace of recovery here in the u.k.
what would've seen in the past 12 months is a continuation of a forecast for the u.k. not the slightly this year are wuhan growth well above 3%. it may subside next year to around 2.5%. is a good growth recovering and against the background of upgrading surprising that the bank of england has had to change its guidance on where interest rates are going. going back to one key factor you have not mentioned is tough to buy in the real estate market. auditedhad substantial easing program. let's not forget the bank of england owns about 35% of the british government bond markets. that is injection and liquidity and has been a key factor in boosting. critics some of that data before -- >> some of that data before mark carney. the interdependence
between the u.k. and eurozone and they were very negative over the past four years and has been the euro crisis. the fact it has ended and would've had recovery led by germany. >> thank you very much for joining us. joining us from credit suisse. guilty as charged. bmp pleas guilty in the u.s. court. war details of the plea and what it means for business. -- on more details of the plea and what it means for business. ♪
>> welcome back to "on the move." i am anna edwards. retailer trading lower this morning. they announce they are down by 4.85%. estimates butbove they were talking about the environment for groceries and they said the grocery market is subdued. one of the factors weighing in two ocada. a guilty plea and a record fine for bnp. the largest bank to settle with the u.s. we heard from the bank. manus cranny has the details. what do they have to say? >> a very strong message in terms of what they did with
compliance and they apologize. the market focuses on two issues. where and how would they pay a $9 billion fine? at 1.5idend will stay euros. there were estimates of around two euros. it is intact. there is still a dividend. capital -- are you going to issue new capital? they are in no rush. the ceo said they are in no rush. and we had chris wheeler and i had a note and you said, capital standard. zero .5%.y it could've been a lot worse. they will take some money from a litigation reserves and will take a hit in terms of the second-quarter numbers. and i think, what you can say are the dividends are intact. capital.or
billion? do two $9 it was the prophet that any institution a up from sanctions. that are the key messages the market is focused on. >> and the stock is moving higher. >> they were saying it was. >> how big a fine is a compared to those in the past? >> this again goes to white $9 billion? it was the amount of profit they made. the majority of the transactions over $6 billion. how much money did they make? why did credit suisse get find as much as they did for helping clients evade taxes? the irs. here we are. the 9 billion dollars. more or less, you heard the word "egregious."
they were told you are being monitored. others have done the same thing. there are many facets. one line that grabbed my attention is the french reaction. french financing said, this about an agreement in the past and a protected future. it will be close from dollar transactions for a year mostly in oil and gas. to putves him time restructuring in place. it will cost them a $14 billion. he warns of the u.s. is punishing banks and encourage europe to further use a euro as a currency for international trade. will the french writer down the value of the $9 billion fine? that is the offset, key question. thank you. the latest on bnp. courting to china. the ceo arrives for a charm
>> welcome back to "on the move." i am anna edwards. youre 30 minutes into trading today. let's see how things are shaping all but across the equity markets. this is where we stand. we are up. up by 0.4%. stock increasing here as we see the fourth quarter game. one of the gainers in this morning's session. the top headlines. chinese manufacturing expanded in june at the fastest pace of this year. government stimulus efforts
are helping to stabilize the economy. no official pmi came in at 51. nicolas sarkozy has been taken into custody in an influence case according to the asp. this is 24 hours after the lawyer was held. israeli security forces have carried out airstrikes on the gaza strip after the bodies of three missing teenagers were found on the west bank. teenagers weree kidnapped by members of hamas. for more on that story, let's get out to elliott gotkine who is in tell -- in tel aviv. they hold hamas responsible and a valid retaliation action against them. bring us up to speed. >> they have. doubts the words of prime minister netanyahu and his forces to call it. some would say only the people
that responsible for the kidnapping and the subsequent murder of these three teenage boys when they were out hitchhiking in the west bank earlier this month. according to media reports, is really security forces entered the homes that israeli security forces entered the homes of the main suspects and have been missing since the three teenage boys were missing and they are the prime suspects. israel said it will gain access to the homes. would've seen dozens of airstrikes and gaza as well. ip isaza strip -- str stronghold.rrorist reighnin -- reining in a militants. israel holding hamas responsible and for the murder of the teenager boys and prime minister
netanyahu saying they were kidnapped and murdered in cold blood and hamas is responsible and hamas will pay. >> are we on the brink of another is really-gaza -- war?li-gaza >> it is too early to tell. a very precarious decision. israel believes they need to show there's a price to pay for kidnapping and murdering civilians. and once to show the world hamas ' true colors. deal with theo new unified palestinian authority which contained the members half hamas. israel has ever since been them to dissolve the punishment and hamas cannot really allow it. they cannot allow to be pushed around by the israelis.
a full out conflict would not benefit either side in i believe they both annoyed it does not mean they will not get to it. gotkine joining us from tel aviv. let's move on and to the pharmaceutical sector. from u.s. is in europe. he is trying to convince them of the merits of the $27 billion pound takeover. they have been re-bought three times abide shyer. -- by shire. what happens as this week? what do we expect? war whichin the air andat the making of case the presentation for the takeover now we have the ground chief executive here in london a meeting with investors and trying to make their case and also signed -- sound out shire's deal. everybody expects abbvie to make
bid and gauge where it needs to be to push shire. they are trading at 45 and what is the number that the abbvie management is talking about? >> in the analyst world, a number of estimates of what it will take. they tended to all-star with a five or a six. does all starts with a five or a six. a all start with a five or six. >> it is a different a case. a week or so ago, it has succeeded at going up power as it has done when we talked about
pfizer coming over and trying to take over astros in a call. are there similarities? or shire does not do a lot of a redevelopment here? there's always a domicile which is in the dublin. a difference? >> it is right. it is not a political story. zero chance of the executives of being called before a committee. just not going to happen. it is not just a prominent company. at the same time, the basic elements of this are rather simpler to the pfizer-astrazeneca. trying ton commie impact away from the u.s. going british company that does not want to be bought. some are tactically similarities for sure if that means the lessons potentially for the practitioners on the abbvie side and many of them will work for pfizer.
fromps, lessons learned the experience will be applied. >> would've seen the store in the pharmaceutical sector and other sectors as well. a big store in pharmaceuticals. i have read rather interesting research. bank of america and j.p. morgan kobe on the list -- and j.p. morgan could be on the list of companies coming over and car manufacturers in europe. is it going to be a continuing trend will will we see momentum in the u.s. to close the loophole or tax regulation which means they do not want to bring their money home or not likely? >> it has been a funny situation. we have heard the u.s. is a capitalist gold aurora. is.tax rate so it it is completely high. >> enjoying suggesting it is a vote of confidence for the u.k. >> he was quite pleased with
himself at the beginning of the pfizer/astrazeneca deal. there is a solid half-dozen european countries that have much lower corporate tax rate , switzerland.land it is something we will see. pharmaceuticals is the focus. industrials potentially and the technology and none of these are off-limits for the trend. with interest.h matt, thank you. matthew campbell. let's bring you up to speed with companies on the move. gm has recalled more than eight million cars in north america because of defect because of malfunctions. than 20 recalled more million cars in this year. gm said they expected take a charge of $1.1 billion in recall related repairs. twitter is said to agree to buy hat.
>> welcome back. i am anna edwards. online food retailer, ocado, posted its first ever profit. it has the lowest analyst rating. brian roberts is here. thank you for coming in. it is not met with positive reaction it is trading down by 8%, who but you found things to like. , a long timeprofit coming. growing at the 20%. that kind of growth.
notes of caution. down. grocery is slowing not as positive as it could be and a lot of competition. into the results, we see more good news. special is a website is trading a website is trading very well. they launched new kitchenward. pockets of growth. markets are really liking it. >> do we know where they made a profit? it is the first time. what about the initial business of delivering groceries? or was it fell partnership with morrison's? >> it does not really matter. the grocery delivery business, ocado, is considering to grow very well. the capacity to be successful
and that is increasing efficiency as a wall the money from morrison's to get -- the money as well and from morrison's to get to their website up and running. >> what would've me if they stopped doing the deliveries them selves -- what would it mean if they started doing the es?ivery themselv they said it are not a grocer but a technology business. case continues to be the in the foreseeable future. ongoinge a number of conversations with businesses looking to start or improve their grocery delivery in their markets. think there are a few in europe and asia and north america. would likeca, too,
's get their hands off ocado intellectual property. thew years down the line, core business will be much more profitable and larger. in more sides to it. and international retailers will start to improve their own operations. in the long-term, a bright future. a lot of investors are not ready to buy in. >> on the chart, we can see it. what has happened the past 2 years. it has rallied from august of 2013 to the peak of february this year. didn't they being would see amazon come in and by the company -- didn't they think we would see amazon come in and by
this company? stockrison's, one reacted. the ocadotantial into business. very long-term agreement. it does not pull the morrison's deal. attractivees a very investment. many resources into it. we might see recovery in the share price if and when, they further tie up with the businesses. >> the point you made about the rate of growth that are seeing in online. bloomberg industries was making an interesting point that the average basket for ocado shoppers is 108 pounds.
it is way less and the supermarket industry. they are only operating and that a big shop part of the market which limits the size of their aspirations i suppose in time of -- in terms of being a bigger retailer. >> we are seeing a trend of people shopping more frequently. that said, there are lots of countries where ocado does not have a strong presence. get into those different corners of the u.k.. does not have any type of ceiling but today are in the market.art of the there is lots of competition comic. it will be tough for them but i think they are in a great place. customer satisfaction in terms of satisfaction.
a good part of the market is very -- [indiscernible] there is a lot of complexity behind ocado. timent.t in sen >> brian roberts, thank you. " is coming up. >> hi, one how much more on the potential $9 billion fee that bnp will face and the guilty plea. what will it mean? we'll be digging into all of that and also be talking about mark carney. one year since he has been at the helm of the bank of england and we will speak to one of former death the governor about how he thinks of mark carney has been doing on the job and if he
has been such an unreliable boyfriend as he has been accused all. at a conference in paris where we will figure out how luxury kenneth arrived in digital innovation. --l have several reviewers we will have several interviews. speaking to to be one gas about how politics can thrive online and if the former secretary of state, hillary clinton will be running in 2016 and what she needs to do with social media in order to win. >> olivia, thank you. here are some companies on the move. has agreedioned bnp to plead guilty to u.s. sanctions violation and will pay a nearly $9 billion fine. it requires certain accent is -- it requires a
that 13 executives leave the bank. revenue fell for the first time in five years. it cut. total growth revenue dropped by 3.7%. mitsubishi said it may have a new takeover targets. after is joint bid with alstom failed. they are looking at the u.s. and europe for growth opportunities. as we head to break, you are in hongat live pictures kong. thousands are protesting against the final say all the appointments of the chief executive. the rally is on the anniversary of hong kong's return to chinese rule. today.15 years the majority of those who cast
♪ >> on name is paul marshall. ♪ >> when we ride the zeroes, it is an ordinary assignment. one we picked out that today. ♪ tool to have on a university. you can go through the little areas the squad cars cannot. we can pretty much go anywhere whether medical emergency or police emergency. we can be there much quicker instead of parking the car and getting there. oftentimes, we are the first one
on the scene. ♪ with the zeroes so quiet, with the role write up on somebody or something and they have no idea we are coming. we could go on the sidewalk instead of putting all lights and going down the wrong way which could create a hazard. we may car stops, bicycle stops. we are more at one with everything instead of being closed off in a patrol car. >> you can drive with those things inside. >> i was quite amazed. a heack of an invention.
>> you would have been arrested. unemployment. it rose by 9000. were looking for a drop of 10,000. it does not sound like good news. >> it is some of the softening in germany. for me today, equity markets are higher for purchasing management in china, waiting for the final reading here in europe. expected to slow down a little bit. those the jobless numbers have not helped the case of real growth. also building the case that at the core, unemployment in germany with the ecb. >> yes. something that looks more like definition.se's more on the table. we will see. thank you very much. olivia sterns is back. "the pulse
>> bnp's fight for the future. the bank promises shareholders a can survive a record fine for sanctions violations. detained for questioning. nicolas sarkozy is reportedly taken into custody amid corruption allegations. -- anddblock for renzi roadblock for renzi. we check out the challenges to his and vicious agenda. -- to his ambitious agenda. liveme to "the pulse," from bloomberg's european headquarters in london.